India-EU Trade Deal: Key Takeaways and Statistics

Strategic Insights -

India and the European Union are striving to reach a comprehensive trade deal by the end of the year, with significant investment commitments from the EU expected in various sectors including legal, accounting, and IT services. However, negotiators are confronting challenges in automobile and alcoholic beverage sectors, as well as non-tariff measures that increase compliance costs for Indian companies. The deal assumes importance as India faces 50 per cent tariffs in the US market, threatening exports worth over $40 billion, while the EU is India's second-largest export market and the largest source of investment in the services sector.

Key Takeaways:

  • The EU is seeking market access in the Indian automobile and alcoholic beverage sectors, which could be more ambitious than what was granted by India to the UK after Brexit.
  • India is working to reduce compliance costs for industries in the EU market, citing high tariffs and internal measures as barriers.
  • The EU committed to scaling up investments in India through the Global Gateway initiative, with a €15 billion investment portfolio in India spanning sectors such as renewable energy, water, and digital infrastructure.
  • The EU and India should jointly assess external vulnerabilities and strategic trade opportunities to identify other priority sectors.
  • India's endorsement of the G7 Critical Minerals Action Plan reflects alignment on key principles, including sustainability, diversification, and market transparency, providing a basis for practical cooperation.

Statistics:

  • India's bilateral trade in goods with the EU reached €120 billion in 2024, a nearly 90 per cent increase over the past decade.
  • Over 6,000 European companies operate in India.
  • Indian investment in the EU totals only €10 billion.
  • The EU's trade in goods and services with India accounts for less than 2.5 per cent of its total trade.
  • The EU has committed to de-risking private-sector investment with guarantees and blended finance through the Global Gateway initiative.
  • The EU's investment portfolio in India under the Global Gateway initiative exceeds €15 billion, spanning sectors such as renewable energy, water, and digital infrastructure.

Sources:

  • The Indian Express
  • European Commission report to the European Parliament